- The Washington Times - Thursday, October 31, 2002

NEW YORK (AP) Investors charged ahead yesterday and bought into Wall Street's 3-week-old rally despite a brokerage downgrade of Wal-Mart.
Analysts said investors were more upbeat after the weeks of strong gains, allowing them to shake off bad news even about Wal-Mart, one of the market's most stalwart companies. But many investors also were cautious as they awaited reports on manufacturing and employment due out this week, and their hesitance made for choppy trading throughout the day.
"This market for the last three to four weeks has shown an impressive ability to look past negative news. I think each time it does that, it gives investors increasing confidence that direction in the near term is up," said Brian Bush, director of equity research at Stephens Inc.
The Dow Jones Industrial Average rose 58.47, or 0.7 percent, to close at 8,427.41, having inched up 0.90 on Tuesday. Earlier, blue-chip stocks dropped as much as 61 points and climbed as high as 90 points.
The market's broader gauges also finished higher. The Nasdaq Composite Index climbed 26.19, or 2 percent, to 1,326.73. The Standard & Poor's 500 index gained 8.56, or 1 percent, to 890.71.
Despite the uneven trading, analysts said, investor sentiment appeared to be improving after pessimism about the economy and corporate profits drove the Dow to a five-year low on Oct. 9. Since then, blue-chip stocks have risen more than 1,100 points.
Analysts cited in particular the market's reaction to a report Tuesday showing consumer confidence tumbling to its lowest level since 1993. Stocks initially dropped sharply before rebounding.
"I think what investors are liking is the momentum the market had the last 3 weeks," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. "The market bent [Tuesday], but it didn't break.
"So there was a lot of sideline cash that figured something was going on here, and saying, 'I better own stocks,'" he said.
Wal-Mart dropped $2.67 to $53.80 after Goldman Sachs downgraded the company's stock rating to "market performer," suggesting it won't continue to outperform the sector as the economy improves.
Analysts say the market remains vulnerable to profit-taking as investors question stocks' long-term strength. Investors also want to see more economic data, such as October employment figures, which will be released tomorrow.
"I wouldn't be surprised to see a little bit of a sell-off, such as short-term traders in the event we get a bad unemployment number," Mr. Bush said. "But the market psychology right now just seems to be very positive."
Exxon Mobil gained 85 cents to $34.08 on higher oil prices prompted by reports showing U.S. products inventories fell last week.
Citigroup rose 58 cents to $37.08 after the financial services company said it would separate its stock research from its investment banking operation to appease securities regulators looking into potential conflicts of interest.
TXU jumped $1.72 to $14.54 after the energy company reported third-quarter earnings of 92 cents, beating Wall Street's expectations by 2 cents.

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